Rough draft 3/19- OVERVIEW: Vancouver Distillery Works is set to build upon a future of long term growth, rather then focus on short term profits. Our goal is to be completely self sufficient within 3 years of start up. Some of our short term goals include purchasing new equipment (see graph 1 below) and moving into a new complex by the start of the second year. In our first year we hope to be able to deliver approximately 628 cases of Vodka with an estimated total Gross Profit of $87,345. Our Sales Projection growth rate is to double that amount each .
Total startup costs for the capital expenditures is approximately $150,000, however we have also included the first year’s expenses which are a total of $100,000. This means that our startup capital request is for a total of $250,000. As for our startup capital as a family they expect to contribute 25% of the total startup costs, and would like to finance the additional costs of $187,500. Again it is our goal to have this loan paid off by the end of the third year of production.
Total 1st Year Capital Purchases
$111,500.00
Total 2nd Year Capital Purchases
$10,500.00
Total Capital Purchases
$122,000.00
Installation and Moving Expenses 2013
$28,000.00
Total First year Investment
$150,000.00
First Year Expenses
$100,000.00
TOTAL REQUESTED INVESTMENT
$250,000.00
The following financial assessment has been researched thoroughly by our team, with the use of many network contacts within the distillery industry, and with some help from the American Distilleries Institute.
Cost Assumptions: When possible, we will purchase used, auction items in order to reduce costs. Used items must be in good working order and provide at least 3-4 years, minimum, of utilization. This means that many costs could be eliminated; however, initial review of the equipment has revealed that better options are available by obtaining auctioned items at a reduced cost. We have provided an accurate depiction of what is necessary to achieve operation by September 1, 2012, as well as, included the installation and moving of our equipment to the new facility by September 1, 2013.
|| Capital Purchases
Item
Cost
Purchase
Date
Years of
Service
Salvage
Value
Equipment
Bottle Filler
$3,000
Sep
2012
10
$500
Forklift
$1,500
Sep
2012
5
$500
Pot Still with Vodka Tower
$20,000
Sep
2012
10
$5,000
Mash Pot
$19,000
Sep
2012
10
$2,000
Fermentation Tanks
$18,000
Sep
2012
5
$0
Fruit Press
$6,000
Sep
2012
5
$1,000
Pumps
$6,000
Sep
2012
10
$1,000
Steam boiler
$15,000
Sep
2012
10
$3,000
still support equipment
$5,000
Sep
2012
5
$0
Blending/Bottling Tank
$18,000
Sep
2012
5
$0
Tasting Room
Construction of Tasting Room
$4,000
Sep
2013
5
$0
Retail Racks
$1,000
Sep
2013
3
$200
Small bar
$1,000
Sep
2013
5
$500
Computer Hardware/Software
Office Computer
$1,000
Sep
2013
5
$300
Accounting System
$1,000
Sep
2013
5
$0
Inventory System
$1,000
Sep
2013
5
$0
Telecommunications
Office Line
$500
Sep
2013
5
$0
Internet Access
$500
Sep
2013
5
$0
Cell phone (3)
$500
Sep
2013
2
$0
Sales Forecast: Our sales assumptions are based upon a limited capacity of sales within the first year as we enter an ever growing marketplace. However, by allowing for a small gross sales this will allow us to get our name out there and with the hopes that we double our sales within the 2nd year. In terms of the two product lines, we hope to have a smaller bottle that will allow the market to learn about us, and a larger bottle to grow into. This is why the sales per case changes after this first year. We have priced our case (without sales and state markup) at approximately $270 per case on the 750ml bottles, and $144 for the 350ml bottles. We estimate that the shelving price will actually be around $340 per case, and as this paperwork has not been finished yet, we wanted to estimate on the lower end. However, by reviewing the following graph- it shows that our Gross sales steadily rise with a 2% growth rate each month for the first year, and by the 2nd year we hope to have doubled the amount of net profit.
Income Statement The following is a sample income statement from our first month, as well as the total of 2012. As you can see our net profit is . Our cost of production is about % of sales, while our Cost of Goods is _% of sales. This means that by time we pay off the loan we will be making a grand total of ___% net profit each year. The biggest percentage of expenses for now goes to Marketing and Salaries. This salary is for an admin ¼ time and a full time distiller the first year. By the third year we hire the admin on full time, so that they can act as in house sales and distribution advisor as needed.
Income Statements
2012
September
TOTAL
INCOME
Gross Sales
$9,720
$130,366
(Returns and allowances)
$292
$3,911
Net Sales
$9,428
$126,455
(Cost of Goods)
$2,916
$39,110
GROSS PROFIT
$6,512
$87,345
EXPENSES - General & Admin
Salaries and wages
$2,803
$33,636
Employee benefits
$0
$0
Payroll taxes
$420
$5,045
Professional services
$42
$500
Marketing and advertising
$2,500
$11,975
Rent
$650
$7,800
Equipment rental
$0
$0
Maintenance
$100
$1,200
Depreciation
$0
$0
Insurance
$0
$0
Telephone service
$50
$600
Utilities
$0
$0
Office supplies
$0
$0
Postage and shipping
$0
$0
Travel
$0
$0
Entertainment
$0
$0
Interest on loans
$624
$7,489
Other (change title here)
$0
$0
Other (change title here)
$0
$0
TOTAL EXPENSES
$6,565
$60,756
Net income before taxes
-$53
$26,588
Provision for taxes on income
$0
$6,647
NET PROFIT
-$677
$14325
Cash Flow
Our analysis has revealed the profitability of this project with a growth rate of __% each year. The first two years are dedicated to paying back the loan, and so we will not see a potential income from this project until the third year. We have estimated our costs, our sales for the next year, and the upcoming five years as seen below. The following calculations show that with the total original investment of 100,000, all initial investments will be paid off at the end of 3 years, if not earlier through the reinvestment of profits.
Investment and Rate of Returns
Return on Investment
Original Investment $ Gain on Investment $ Investment Term (Years) 5.0 ROI (%) % Simple Annualized ROI (%) %
Net Present Value =NPV=
$
Annual Rate of Return =
Profitability Index =
Five-Year Cash Flow
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Cash flow? What will we do for cash?
Balance Sheet: 1, 2 and 5 (when will we pay things off?)
Key Ratios: Profability ratios (ROI, ROS) Leverage/Liquidy Ratios (Current Ratio, Cash Turnover) Debt Ratio (debt to equity) RATIOCALCULATIONShort Description
Main Ratios
Quick Ratio - Account Receivable/Total Current Liabilities (Ability to liquidate short term asset vs. short term liabilities) Current Ratio - Total Current Assets/Total Current Liabilities (Margin of Safety to cover reduction in current assets) Total Debt to Assets - Short Term Debt + Long Term Debt/Total Assets )Measures Financial Risk) Return on Equity- Net Income (after tax)/Shareholder Assets (Measures Rate of Return on Shareholder's Equity) Debt to Net Worth = Total Liabilities/Shareholders Equity (Measure of the Company's Financial Leverage) Liquidity Ratios Net Working Capital - Current Assets - Current Liabilities (Measures the Company's Efficiency and short-term financial health) Additional Ratios Net Profit Margin -Net Income/Revenues (Calculates the rate of profitability) Activity Ratios Inventory Turnover- Sales/Inventory OR Cost of Goods Sold/Average Inventory (Looks at how fast inventory is sold) Total Asset Turnover - Revenue/Assets (Amount of Sales generated over assets) (these ratios should be calculated for your business, but more importantly, you need to find out what the industry standards are and compare your numbers.) Valuation after 5 years
Exit Plan
Should the Distillery fail to meet its goals, after 5 years, buy-out options and/or sale to a new owner will be considered.
3/14 Outline:
OVERVIEW: -long term growth vs. short term profits -Sales Projections growth -What to expect the first, second and five years from now. Startup Capital expectations & repayment Date of commencement? thorough review and assessment by our team
Assumptions:
Vodka product % of total production first year; % of total production second year Other Spirits, flavored spirits % of total production first year; % of total production second year
Annual Output: _ cases (max capactity) Case size 12 bottles, at 750mL a bottle
Sales Forecast: He wants to sell out of production $12-14, but guessing final markup will be approximately $28-30. (waiting on COGS)
Income Statement Biggest percentage goes to? Will we—generate a profit?
Cash flow? What will we do for cash?
Balance Sheet: 1, 2 and 5 (when will we pay things off?)
Key Ratios: Profability ratios (ROI, ROS) Leverage/Liquidy Ratios (Current Ratio, Cash Turnover) Debt Ratio (debt to equity)
Start-Up Funding /Required total outside investment WORKING CAPITAL: Guessing it is about 40/50k Requested Investment: & interest rate
Break-Even Analysis
Use of Funds
Wages: $68,264 Bottles: $2.00 w/ label for 750ml (we need to check prices for 375) John is going to provide us with a COGS per 375 and 750 bottle. Equipment: Pot Still w/ Vodka Tower, Mash Pot, Fermentation Tanks, Fruit Press, Pumps, Bottle Filler, Forklift Still can range from 150k-20k and is willing to look at used equipment. Materials: Grains, Malted Barley, Yeast, Enzymes, Chemicals, Fruits
Our 1000L Vodka still is about 107.000 EUR, I have included a brochure with pictures.
I've attached an additional equipment list as well, it should have pricing on tanks, pumps, hoses, pretty much all the equipment you would need for a distillery. You might also want to look into a glycol unit they are usually around 25k or so. For boiler, check usedboilers.com for some used pricing but it should be around 10k for a used boiler and around 15-20k for installation.
Attached is a basic price guideline for the batch distillation systems. Good Luck with your project. We don't have information on bottling equipment. Check with your local plumbers supply for a price on a boiler.
Powerpoint Slide Outlines:
Financial Info:
3/23 Rough Draft- working on valuation & ratio analysis- still need any additional startup fees from Nic
Rough draft 3/19-
OVERVIEW:
Vancouver Distillery Works is set to build upon a future of long term growth, rather then focus on short term profits. Our goal is to be completely self sufficient within 3 years of start up. Some of our short term goals include purchasing new equipment (see graph 1 below) and moving into a new complex by the start of the second year. In our first year we hope to be able to deliver approximately 628 cases of Vodka with an estimated total Gross Profit of $87,345. Our Sales Projection growth rate is to double that amount each .
Total startup costs for the capital expenditures is approximately $150,000, however we have also included the first year’s expenses which are a total of $100,000. This means that our startup capital request is for a total of $250,000. As for our startup capital as a family they expect to contribute 25% of the total startup costs, and would like to finance the additional costs of $187,500. Again it is our goal to have this loan paid off by the end of the third year of production.
The following financial assessment has been researched thoroughly by our team, with the use of many network contacts within the distillery industry, and with some help from the American Distilleries Institute.
Cost Assumptions:
When possible, we will purchase used, auction items in order to reduce costs. Used items must be in good working order and provide at least 3-4 years, minimum, of utilization. This means that many costs could be eliminated; however, initial review of the equipment has revealed that better options are available by obtaining auctioned items at a reduced cost. We have provided an accurate depiction of what is necessary to achieve operation by September 1, 2012, as well as, included the installation and moving of our equipment to the new facility by September 1, 2013.
|| Capital Purchases
Date
Service
Value
Sales Forecast:
Our sales assumptions are based upon a limited capacity of sales within the first year as we enter an ever growing marketplace. However, by allowing for a small gross sales this will allow us to get our name out there and with the hopes that we double our sales within the 2nd year. In terms of the two product lines, we hope to have a smaller bottle that will allow the market to learn about us, and a larger bottle to grow into. This is why the sales per case changes after this first year.
We have priced our case (without sales and state markup) at approximately $270 per case on the 750ml bottles, and $144 for the 350ml bottles. We estimate that the shelving price will actually be around $340 per case, and as this paperwork has not been finished yet, we wanted to estimate on the lower end. However, by reviewing the following graph- it shows that our Gross sales steadily rise with a 2% growth rate each month for the first year, and by the 2nd year we hope to have doubled the amount of net profit.
Income Statement
The following is a sample income statement from our first month, as well as the total of 2012. As you can see our net profit is . Our cost of production is about % of sales, while our Cost of Goods is _% of sales. This means that by time we pay off the loan we will be making a grand total of ___% net profit each year. The biggest percentage of expenses for now goes to Marketing and Salaries. This salary is for an admin ¼ time and a full time distiller the first year. By the third year we hire the admin on full time, so that they can act as in house sales and distribution advisor as needed.
Cash Flow
Our analysis has revealed the profitability of this project with a growth rate of __% each year. The first two years are dedicated to paying back the loan, and so we will not see a potential income from this project until the third year. We have estimated our costs, our sales for the next year, and the upcoming five years as seen below. The following calculations show that with the total original investment of 100,000, all initial investments will be paid off at the end of 3 years, if not earlier through the reinvestment of profits.
Investment and Rate of Returns
Return on Investment
Gain on Investment $
Investment Term (Years) 5.0
ROI (%) %
Simple Annualized ROI (%) %
Five-Year Cash Flow
Cash flow? What will we do for cash?
Balance Sheet: 1, 2 and 5 (when will we pay things off?)
Key Ratios:
Profability ratios (ROI, ROS)
Leverage/Liquidy Ratios (Current Ratio, Cash Turnover)
Debt Ratio (debt to equity)
RATIO CALCULATION Short Description
Main Ratios
Quick Ratio - Account Receivable/Total Current Liabilities (Ability to liquidate short term asset vs. short term liabilities)
Current Ratio - Total Current Assets/Total Current Liabilities (Margin of Safety to cover reduction in current assets)
Total Debt to Assets - Short Term Debt + Long Term Debt/Total Assets )Measures Financial Risk)
Return on Equity- Net Income (after tax)/Shareholder Assets (Measures Rate of Return on Shareholder's Equity)
Debt to Net Worth = Total Liabilities/Shareholders Equity (Measure of the Company's Financial Leverage)
Liquidity Ratios
Net Working Capital - Current Assets - Current Liabilities (Measures the Company's Efficiency and short-term financial health)
Additional Ratios
Net Profit Margin -Net Income/Revenues (Calculates the rate of profitability)
Activity Ratios
Inventory Turnover- Sales/Inventory OR Cost of Goods Sold/Average Inventory (Looks at how fast inventory is sold)
Total Asset Turnover - Revenue/Assets (Amount of Sales generated over assets)
(these ratios should be calculated for your business, but more importantly, you need to find out what the industry standards are and compare your numbers.)
Valuation after 5 years
Exit Plan
Should the Distillery fail to meet its goals, after 5 years, buy-out options and/or sale to a new owner will be considered.
3/14 Outline:
OVERVIEW:
-long term growth vs. short term profits
-Sales Projections growth
-What to expect the first, second and five years from now.
Startup Capital expectations & repayment
Date of commencement?
thorough review and assessment by our team
Assumptions:
Vodka product % of total production first year; % of total production second year
Other Spirits, flavored spirits % of total production first year; % of total production second year
Annual Output: _ cases (max capactity)
Case size 12 bottles, at 750mL a bottle
Sales Forecast:
He wants to sell out of production $12-14, but guessing final markup will be approximately $28-30. (waiting on COGS)
Income Statement
Biggest percentage goes to?
Will we—generate a profit?
Cash flow? What will we do for cash?
Balance Sheet: 1, 2 and 5 (when will we pay things off?)
Key Ratios:
Profability ratios (ROI, ROS)
Leverage/Liquidy Ratios (Current Ratio, Cash Turnover)
Debt Ratio (debt to equity)
Start-Up Funding /Required total outside investment
WORKING CAPITAL: Guessing it is about 40/50k
Requested Investment: & interest rate
Break-Even Analysis
Use of Funds
Wages: $68,264
Bottles: $2.00 w/ label for 750ml (we need to check prices for 375)
John is going to provide us with a COGS per 375 and 750 bottle.
Equipment: Pot Still w/ Vodka Tower, Mash Pot, Fermentation Tanks, Fruit Press, Pumps, Bottle Filler, Forklift
Still can range from 150k-20k and is willing to look at used equipment.
Materials: Grains, Malted Barley, Yeast, Enzymes, Chemicals, Fruits
Valuation after 5 years
Exit Strategy
From Emails to Equipment Vendors: